Microsoft and Chevron have inked a 20-year commercial agreement to power artificial intelligence infrastructure with the construction of a 2.7GW gas-fired power facility in West Texas known as Project Kilby in the Permian Basin.
Kilby will deliver dedicated electricity to a new Microsoft-operated data centre by bypassing the regional grid.
Project Kilby
The facility will burn locally sourced natural gas to provide base-load power, and when fully operational, the site will generate enough electricity to supply roughly two million homes.
Chevron is partnering with investment firm Engine No. 1 and energy company Joulent to execute the Texas build, expected to cost around $7 billion, with Caterpillar and GE Vernova to supply the gas turbines required.
The asset provides Chevron with cash flow separated from the standard fluctuations of global crude prices.
Market and timeline
Microsoft needs to scale up compute infrastructure without relying on standard grid connection timelines, and by co-locating the power plant alongside the data centre, the companies are able to sidestep common transmission bottlenecks.
A final investment decision from the Chevron board is scheduled for the end of 2026, with operations expected to commence and deliver power directly to the facility by 2028.
